ESG's forgotten stakeholders.

ESG can no longer be an afterthought for businesses. Embedding ESG into your business strategy is no more an opportunity to get ahead of your competitors and tick investor relations boxes, it is now a holistic approach to the way a business conveys itself externally and internally.

There is a lot of evidence demonstrating how a purposeful approach to environmental consciousness, positive social impact and good governance, has a positive impact on your stakeholders, particularly on the correlations between a business’ share price and financial performance- but the impact on #EMPLOYEES is often overlooked. There needs to be a wider conversation on the impact a company’s ESG mentality can have on internal talent – both from a retention and attraction perspective.

Since the bounce back from COVID-19, the recruitment market has seen a ‘war for talent’- and I don’t like to use this cliché lightly. Counter offers, extreme wage inflation and generous work benefits have all been the weapons used to secure the desired candidate. And for good reason- the cost of a bad hire can be astronomical considering the time it takes to get them through the door, the emotional impact on the team, the extra strain on workload… the list goes on. And even more efficient than a good hire is the retention of good staff! ??

In a recently study conducted by Marsh- “ESG as a Workforce Strategy study”- (highly recommend for anyone to take a look!), it was found that 'companies with highly satisfied employees have, on average, 14% higher ESG scores than the global average’.

And when broken down to each component of ESG, the biggest differentiator for those firms with highly satisfied employees was their environmental performance, suggesting that the higher ESG scores of top employers are driven by superior environmental scores’.

-More shocking to me, none of the companies within a ‘high-emission sector’ were ranked as a top firm for employee satisfaction. Evidently, employees care about the environment.

‘Happy’ employees doesn’t just lead to lower attrition rates, and lower recruitment costs - it has been proven that satisfied employees are more productive, are more inclined to put in those longer hours to hit a deadline and are generally more motivated to produce better results for their employer. And looking holistically, engaged employees with a sense of purpose in their work will be inclined to be more collaborative.

Robert Half’s 2023 Salary Guide study reveals that 7 in 10 (70%) business leaders say that their employees care more about ethical behaviour and citizenship than they did 12 months ago, with 53% of workers refusing to work for an employer they think is unethical.

A similar conclusion was also made by a study done by PwC who found employees prefer to work with firms who care about key issues which align with their own beliefs.

This sense of ‘shared purpose’ in the workplace will only become more prevalent in the coming years when the next generation of leaders takes the reins! The report by Marsh highlighted that by 2029, 72% of the workforce will be made up of Millennials and Gen-Z, compared to 52% in 2019, and that ‘these generations place even greater importance on environmental and social concerns than their predecessors’.

By strengthening the topic of ESG in the boardrooms and ingraining it in all business activities and decisions now, organisations will future proof themselves by attracting the top talent they need to nurture into their leaders of tomorrow, all while boosting the satisfaction and engagement of current employees, ensuring better retention and improved productivity across the whole business.

#ESG #environment #social #governance #employees #RobertHalf

REFERENCES

Iacurci, G. (2021). Money invested in ESG funds more than doubles in a year. [online] CNBC. Available at: https://www.cnbc.com/2021/02/11/sustainable-investment-funds-more-than-doubled-in-2020-.html

Henisz, W., Koller, T. and Nuttall, R. (2019). Five ways that ESG creates value Getting your environmental, social, and governance (ESG) proposition right links to higher value creation. Here’s why. [online] Available at: https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/Strategy%20and%20Corporate%20Finance/Our%20Insights/Five%20ways%20that%20ESG%20creates%20value/Five-ways-that-ESG-creates-value.ashx.

Bailey, R. and Ferguson, A. (n.d.). ESG as a Workforce Strategy. [online] www.mmc.com. Available at: https://www.marshmclennan.com/insights/publications/2020/may/esg-as-a-workforce-strategy.html.

ESG as a workforce strategy Part I: Overview and Results. (n.d.). [online] Available at: https://www.marshmclennan.com/content/dam/mmc-web/insights/publications/2020/may/ESG-as-a-workforce-strategy_Part%20I.pdf.

PwC (2021). 2021 Consumer Intelligence Series survey on ESG. [online] PwC. Available at: https://www.pwc.com/us/en/services/consulting/library/consumer-intelligence-series/consumer-and-employee-esg-expectations.html.

ENGAGING TODAY’S WORKFORCE. (n.d.). INSIGHTS FROM 25 YEARS OF RESEARCH. [online] Available at: https://www.mercer.com/content/dam/mercer/attachments/private/gl-2017-career-engaging-todays-workforce-insights-from-25-years-of-research-mercer.pdf?

ILOSTAT. (n.d.). Labour market information systems (LMIS). [online] Available at: https://ilostat.ilo.org/resources/labour-market-information-systems/

THG Fluently (n.d.). Market research for the digital era: Connecting with Gen Z. [online] Available at: https://www.thgfluently.com/market-research-for-the-digital-era-connecting-with-gen-z?gclid=Cj0KCQiAtICdBhCLARIsALUBFcHOc6pcORunSsmHr0cyNuTSCzC1NSKXzrzyEeu7sgbicSlokGxKJZ4aAqe8EALw_wcB&gclsrc=aw.ds

Flipsnack (n.d.). TEAM LEWIS Foundation X HeForShe - IWD 2022. [online] Flipsnack. Available at: https://www.flipsnack.com/teamlewis/team-lewis-foundation-x-heforshe-iwd-2022-report.html

World Economic Forum (2020). The Global Risks Report 2020 Insight Report 15th Edition. [online] Available at: https://www3.weforum.org/docs/WEF_Global_Risk_Report_2020.pdf

PROTIVITI and Hirth, B. (n.d.). Transcript - ESG and Financial Reporting Trends. [online] Available at: https://www.protiviti.com/us-en/podcast-transcript/esg-and-financial-reporting-trends. In this podcast, Protiviti Senior Managing Director Bob Hirth and Managing Director Chris Wright share their thoughts and insights about a number of ESG topics.

Shout out to Ryan Lall and Tsvetan Gushanski for the support in writing and editing.